I
ntr
oduct
iont
oRegul
arI
ncomeTax
Assumi
ngthecorpor
ati
oni
sar
esi
dentf
orei
gncor
por
ati
on.t
hei
ncomedueShal
lbe
comput
edasfol
lows:
Taxabl
eincome(
Phi
l
ippi
nes) 1,
200,
000
Mul
ti
plyby
:Taxr
ate. 25%
I
ncomet
axdue. 300,
000
Not
e:Resi
dentf
orei
gncor
por
ati
oni
staxabl
eonPhi
l
ippi
nei
ncome
Ther
eisnodi
sti
nct
ionbet
weenl
argecor
por
ati
onorMSMEwheni
tcomest
ofor
eign
cor
por
ati
on.The25%pr
opor
ti
onal
taxsi
mpl
yappl
i
es
Mi
nimum Cor
por
ateI
ncomeTax(
MCI
T)
Corpor
atetaxpayersarenormall
ysubjectt
oami ni
mum tax,computedas2%oft otal
gr oss
i
ncomesubj ecttoregul
ar.Thi
smi ni
mum taxist empor
aril
yreducedto1%t hi
spandemi cfr
om
Jul
y1, 2020toJune30, 2023.Ev
enifcorporati
onsarelosi
nginbusiness,
theyaresubjecttot
he
minimum tax.Detai
lsoftheMCITwillbediscussedinChapter15-B.
Speci
alCor
por
ati
ons
SpecialCorpor
ati
onsar ethoseenj
oyi
nglowertaxrat
esbutnot0%,suchaspri
vat
eschool
s,
non-prof
ithospi
tal
sandPEZAorTI EZA-r
egist
eredent
erpr
ises.Thet
axat
ionoft
hese
corporat
ionswil
lbediscussedthor
oughl
yinChapterI
S-A
ExemptCor
por
ati
ons
Exemptcor por
ationsar ethoseenjoyi
ng0%t axrat
ewi thnot axduesuchasgover
nment
agencies,
non-profitorganizati
onswit
hnot axabl
eincome, cooperat
ives,
andt
hoseregi
ster
ed
wit
ht heBoardofI nvestment s(BOI
)enjoy
ingincomet axholi
dayorITH.
I
NCOMETAXRETURNS
Taxr
etur
nfor
m ,
I
ndi
vi
dual
taxpay
ers
For
m 1700. Pur
ely
nempl
oyedt
axpay
ers
For
m 1701A. Pur
elyi
nbusi
nessorpr
ofessi
on.
usi
ngit
emizedOSDoropt
ingt
othe8%opt
imal
incomet
ax
For
m 1701. Mi
xedI
ncomeear
ner
s,est
atesandt
rust
Cor
por
ateI
ncomet
axpay
ers
Form 1702-
RT copor
ati
onsubj
ectonl
ytot
he25%r
egul
ari
ncome
tax
For
m 1702-
MX. cor
por
ati
onsubj
ectt
ospeci
alorcombi
nat
iont
axr
ates
For
m 1702-
EX. cor
por
ati
ont
axexepmt
swi
thnot
axdue
Chapt
er7-I
ntr
oduct
iont
oRegul
arI
ncomeTax
I
tshouldbenot edthatexemptcorporat
ionsarerequir
edt orepor tt
heiroper
ationsthroughBIR
Form 1702-
EXev eniftheydonothav etaxabl
eincome.Theyar emandat edt
oi temizedtheir
deducti
onsintheiri
ncomet axret
urns.Ther ul
eisappar ent
lyintendedtoassisttheBIRi n
monitori
ngcompl i
anceofcorporati
onwi t
htheirwi
thholdingtaxobligati
onsandt oprovidefor
mechanism t
oi dent
ifyincomeearnedbyt hi
rdpart
ies.
Exemptcor
por
ati
onswithgrossi
ncomesubj
ectt
other
egul
arcor
por
atei
ncomet
axorspeci
al
rat
eshal
lfi
l
eBIRForm 1702-
MX.
Deadl
i
neoff
il
ingt
hei
ncomet
axr
etur
n
Theannualincometaxr
etur
nisdueforf
il
ingont
he15thdayoft
hefour
thmont
hfol
l
owi
ngt
he
taxabl
eyearofthet
axpayer
.Thei
ncometaxdueshal
lbepai
dbyfil
i
ng.
Roundi
ngr
ulesi
nthei
ncomet
axr
etur
ns
Therequirementf
orenter
ingcentav
osinthel
atestversi
onoftheinxometaxretur
n(June2013
ver
sion)hasbeeneli
minated.I
ftheamountofcentavois49orless,t
hecentavosaredr
opped
down.Iftheamountis50centavosorr
oundedupt othenextpeso.
Hence,anamountforP100.49shal
lbeent
eredi
nthei
ncomet
axr
etur
nas100.
00.Anamount
ofP100.50shal
lberoundedtoP101.
Requi
redAt
tachmenti
ntheAnnual
IncomeTaxRet
urn
1.Cer
ti
fi
cat
eofI
ndependentCPA—i
fannual
sal
es,
ear
nings,
recei
ptorout
putexceed
2.Suppl
ement
alf
ormf
ort
axpay
erswi
thmul
ti
pleact
ivi
ti
esperr
egi
me
3.Accounti
nfor
mat
ionf
orm andf
inanci
alst
atement
s(FS)showi
ng:
a.Sal
es/
recei
pts/
fees
b.
Costofsal
es/
ser
vices
c.
Non-
oper
ati
ngandot
hert
axabl
eincome
d.
It
emi
zeddeduct
ions(
ift
axpay
erdi
dnotav
ail
ofOSD)
e.
Taxesandl
i
censes
f
.Ot
heri
nfor
mat
ionpr
escr
ibedt
obedi
scl
osedi
ntheFS
4.
Stat
ementofmanagementr
esponsi
bil
i
ty(
SMR)
5.
Cer
ti
fi
cat
eofi
ncomepay
ment
snotsubj
ect
edt
oWi
thhol
dingTax(
BRFi
2304)
6.Cer
ti
fi
cat
eofcr
edi
tabl
ewi
thhel
datsour
ce(
BIRFor
m 2307)
7.Dulyappr
ovedTaxdebi
tmemo,
ifappl
i
cabl
e 8.
Proofofpr
iory
ear
'sexcesscr
edi
ts,
if
appl
icabl
e
9.
Proofoff
orei
gnt
axcr
edi
ts,
ifappl
i
cabl
e
7I
ntr
oduct
iont
oRegul
arI
ncomet
ax
10.Foramendedr
etur
n,pr
oofoft
axpay
mentandt
her
etur
npr
evi
ousl
yfi
l
ed
11.Cer
ti
fi
cat
eoft
axt
reat
yrel
i
ef/
Ent
it
lementi
ssuesbyt
heconcer
nedI
nvest
ment
sPr
omot
ion
Agemcy(I
PA)
QUARTERLYFI
LINGOFI
NCOMETAXRETURN
Corporat
ionsandindiv
idual
sengagedi
nbusinessandthoseengagedi
nthepracti
xeofa
prof
essionarerequi
redtofi
let
hreequar
ter
lyret
urnsasi
defrom t
heannualconsol
idat
edi
nckme
taxret
urn.
I
ndivi
dual
taxpayer
sengagedi
nbusinessorprofessi
onshall
fil
equarter
lyi
ncomet
axr
etur
ns
usi
ngBIRForm 1701QCorpor
ati
onsshall
fil
etheirusi
ngBIRForm 1702Q
Taxpay
ersmakeestimat
edquart
erl
ytaxpayments.Thesequart
erl
ypay
ment
scl
aimedast
ax
cr
edit(
deduct
ions)t
otheannual
consol
idat
edincomet axdue
DETERMI
NATI
ONOFTAXDUEUNDERI
NTERI
M CHANGEI
NCORPORATETAX
Undersecti
on27oft heNIRC,asamended,thetaxabl
eincomeofcorporati
onadopt i
ngt
he
fi
scal
-yearaccount
ingperi
odshallbecomputedwithoutr
egar
dtospeci f
icdatewhenspeci
fi
c
sal
es,purchasesandotheroccur
.Theiri
ncomeandexpensesforthefiscalyearshal
lbe
deemedtohav
ebeenear
nedandspentequal
l
yforeachmont
hoft
heper
iod.Thi
sist
hepr
o-
rat
amethod
TheNIRCdi dnotspeci fyamet hodf orcorpor
ati
onsr eporti
ngonacalendary earcounti
ng
peri
od.Inpr acti
ce,however,t
heBI Rhasbeenconsi stentinusingthero-r
atamet hodin
i
mplement ingcor porat
etaxratetransit
ionsforanycor porat
expayerwithoutregardasto
whethertheyr eporti
ngunderacal endaroraf i
scalcountingperi
od.Thisisobservabl
einRMC16
-
2006i nimpl ementingthetaxrateInsit
ionsunderRA9337andi nRR5-2021ini mplementi
ngt
he
taxrat
etransi t
ionunderRAI1534ort heCREATEl aw.
I
ll
ust
rat
ion1:
Fiscal
yearbasi
s
Tr
ansCor p.earnedatotal
OfP18,
000,
000forthefi
scalyearst
art
ingNovember1,2019endi
ng
October31,2020.TheCREATElawchangedtheregul
arcorpor
atetaxf
rom 30%to25%
ef
fecti
veJuly1, 2020.
Thei
ncomet
axdueshal
lbecomput
edf
ort
hef
iscal
yearasf
oll
ows
Fi
scal
yeart
axabl
eincome. 18,
000,
00
Di
vi
dedby
:mont
hsi
nay
ear
. 12
Mont
hlyt
axabl
eincome. 1,
500,
000
Deadl
i
neonquar
ter
lyi
ncomet
axr
etur
ns
Quar
ter
lyi
ncomer
etur
ns. i
ndi
vi
dual
s. cor
por
ati
on
1stquar
terI
TR. May15 samey
ear
. 60day
sendof1stqr
t
2ndquar
terI
TR. . August15samey
ear
. 60day
sendof2ndqr
t
3r
squar
terI
TR. Nov
ember15samey
ear
. 60day
sendof3r
dqr
t
quarterl
yincometaxreturnsofi
ndivi
dual
sengagedinbusinessorpr
ofessi
onaredue45days
from theendofthefi
rstthreequart
erwhereasthequar
ter
lyincometaxret
urnsofcor
por
ate
taxpayersaredue60day sfrom t
heendoft hequar
ter
.
f
requencyofRepor
ti
ngPerTaxpay
erTy
pe
Taxpay
er. Fr
equencyofTaxr
epor
ti
ng
I
ndi
vi
dual
s
Pur
ecompensat
ioni
ncomeear
ner
. Annual
Pur
elyengagedi
nbusi
nessorpr
efessi
on. Quar
ter
ly&Annual
Mi
xedi
ncomeear
ner
. Quar
ter
ly&Annual
Cor
por
ati
ons. . Quar
ter
ly&Annual
Thesubst
it
utedf
il
ingsy
stem f
orempl
oyees
pur
ecompensat ionincomeearner
smayber el
i
ev edfr
om t heobl
igati
ont ofi
l
etheirannual
i
ncomet axretur
niftheyhavenotaxablei
ncomef r
om othersourcesotherfr
om theirl
one
employ
er.Theempl oyeemayav ai
lofthesubsti
tutedf
ili
ngsy st
em wher ei
ntheempl oyershal
l
wit
hhol
dt heincomet axoft
heempl oyee'
scompensation.
theemploy
ercor rect
lywit
hheldthetaxdueoftheempl oyeest
hrought hewit
hholdi
ngtaxon
compensati
on, t
heempl oyeeneednotf i
l
ehisForm 1700mor esincetherewoul
dbenor esi
dual
taxdueortaxrefundabl
e.TheFor m 1700isr
equir
edift heemployeehasothertaxabl
eincome
orhasmoret hanoneempl oyer,
eit
herconcurr
entorsuccessive,dur
ingtheyear
.
